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Why should people invest in real estate now?

By on November 29, 2010
In an ever-changing world financially, one must do something to make their money grow and have some sort of retirement plan in place.  Statistics show that the majority of people have little to no money set aside for retirement. Are you part of this statistic?

While there are many places to invest your money, why should real estate be part of your portfolio?  Real estate has been rather volatile the past few years.  In the United States the past several years, there have been millions of people who have been affected by the real estate bubble. But why?

That depends on whether you were a real estate investor or homeowner.  Millions of homeowners bought homes in the peak of the bubble and to make things worse, got into terrible loan programs, in which they didn’t understand.  These loans were not fixed and they readjusted higher rates within 1-5 years of the origination. The homeowner could no longer afford the adjusted rate, and with no way out, were subject to foreclosure.  The total economy worldwide began to spin out of control and people lost jobs, making things even worse, leaving more people unable to pay their mortgages and therefore  to lose their home.

Then you have the real estate investor -or should I refer to many of them as, the real estate speculator.  These individuals watched the real estate market climb at rapid rates never seen before.  Places like California, Florida, Nevada and many others were seeing 30 to 40 per cent – even as high as 50 per cent annual increases in property values.  They started buying properties assuming the market would continue to boom.  Builders and developers continued to build at record numbers.  These speculators got caught buying properties at current market values and even higher.  The market came to an abrupt halt. When a foreclosure and is filed and the property is then sold at a lesser value, it brings the home values in the immediate down.  Couple this with more and more foreclosures you now have properties worth significantly less than what is actually owed on the property. Investors who planned on holding the property for one-year and then selling to a new home-buyer making huge profits on the annual app-reciation we were experiencing, are now now sitting on a home with a current value far less than what they purchased it for and what was actually owed.  

Now what?  This became a nationwide epidemic and home prices plummeted.  You might be thinking why would anyone buy now?  In reality, the best way to make the biggest return on investment is to buy low and sell high.  However, the best way currently is to buy low and sell low.  There have not been prices like this since the ‘80s in the United States.  People with cash people with great credit, savvy non-USA citizens with cash, are getting in on the great real estate opportunities in the United States.

So, why invest in real estate and why now?  With the millions of people who lost their jobs, many have also lost their homes.  In order to be able to buy a home, they need to get financing.  Being able to obtain financing is directly reflected on your credit scores and the amount of money you have to put down on a property.  And even if you have the money to put down, these former buyers who lost their homes have major credit issues and will not be able to obtain financing.  Rental properties are on the rise, as people still need a place to live.  Investors are able to buy properties at 40 to 70 per cent of their fair market value, as banks cannot afford to hold these bad loans – which for investors is the greatest time to make huge profits.  Another benefit to investors is that these properties can now cash flow because the loans are far less and the rents more than cover their expenses, leaving them with cash flow and a perfect position as the market will slowly recover and will go back up.  It is the perfect scenario for anyone who understands when and how to buy.

So how do you get in on the Gold Rush?  If you do not have the money that most lenders require to put down, if you have bad credit, or no credit you can still get into this great opportunity.

There are billions of dollars looking for a safe secure investment.  Learn how to raise private capital and use OPM, (Other People’s Money) to build your retirement account.  

And if you don’t do real estate, what other options do you have?  Going back to school is always an option. What will that degree cost you?  And when you receive this degree, how many others must you compete against for that job with an economy that has few job opportunities?

How many times have you said you were going to do something and never did it?  How many times have you heard that in a down economy is the best time to make big money?  How many more times are you going to sit back and watch a great opportunity pass you by?

With the current foreclosures affecting millions of Americans, there has never been a better opportunity to buy real estate in the United States.  Investors knowing the great opportunities are getting in on the gold rush.  

Real estate has cycles; they go up and they go down. These cycles are between ten to fifteen years.  During any cycle there are numerous strategies a savvy investor can use to buy and make great returns.  Anyone who has cash or the ability to obtain bank financing is able to create massive wealth.  

Current statistics indicate that the majority of people have little to no money set aside for retirement. Real estate offers a perfect opportunity to get back on track and build a secure retirement.

One huge benefit to buying real estate is leverage.  You can buy something valued for a much higher price than what you need to come out of pocket to acquire it.  For example, if you wanted $100,000of stock, you have to invest $100,000. If you want to buy a home valued at $100,000, you only need 20 per cent down. In reality with the same $100,000 stock investment, you could buy half a million in real estate.

Real estate also has numerous tax advantages offsetting the income to where you hardly pay any taxes if any at all.

If I were to ask you if would like to own something that goes up in value while someone else pays for it, what would you say? You would say I’d like to have hundreds of them, right? Imagine owning something that goes up in value, while someone else pays for it. The government will also allow you to depreciate the building for 27 and a half years offsetting much of the income resulting in little to no taxes. Use an entity to expense things out including management fees, health insurance, retirement accounts, and the list goes on.

Another huge benefit to real estate are the three types of income. You can get earned, passive, and portfolio income.  Earned income is fast, buy, fix, and sell. Passive is from buying and holding multi unit apartments or commercial and receiving rental checks every month. Portfolio is holding the notes.

The benefits to real estate are enormous and now is the very best time to be buying.

INFO
Michael J. Van Horn is a speaker, author, mentor, and entrepreneur. He has taught thousands of students all over the world on how to invest in real estate, credit and raising private capital.

http://moneymagnetman.com
http://excelcreditscore.com

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